Here's why the Airtasker (ASX:ART) share price could be a buy

Airtasker shares could be worth considering as the business ramps up its growth.

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The Airtasker Ltd (ASX: ART) share price may be worth thinking about because the business could have a lot of growth potential.

What is Airtasker?

For readers that don't know what Airtasker is, it's a platform business that connects people who are ready to work with people who need work to get done.

It offers a wide range of tasks, such as home cleaning, handyman jobs, admin work, photography, graphic design or building a website.

With that in mind, here are some reasons why the Airtasker share price could be one to think about:

Rapid growth

A business that is growing revenue quickly over several years gives itself more chance to deliver good returns to shareholders.

In FY21 alone, it saw 38% revenue growth to $26.6 million. This beat the prospectus guidance of $24.5 million. Gross profit went up 39% to $24.8 million.

The last financial year also saw gross marketplace revenue (GMV) increase by 35% year on year to $153.1 million, beating the prospectus forecast of $143.7 million. Two years ago in FY19 its GMV was $93.2 million.

Underlying pro forma earnings before interest and tax (EBIT) grew by 57.2% to a loss of $2.2 million.

Very strong margins

The ASX share says that its user-aligned business model and light touch operations deliver strong gross profit margins.

In FY21 it saw a gross profit margin of 93%. Not many ASX shares have gross margins above 90%. Within that gross margin, 4.9% was for payment costs and 2.1% of insurance costs.

When a business has such a high gross profit margin, it means that a lot of the new revenue can fall straight to the next line of profit. This could be helpful for driving the Airtasker share price higher if underlying profit can grow.

Already cashflow positive

Lots of technology businesses list onto the ASX with outflows of operating cashflow as they spend for growth until scale allows them to reach breakeven.

However, Airtasker achieved positive operating cashflow of $5.5 million in FY21, beating its prospectus forecast of $0.1 million.

Management said that with positive operating cashflow and a strong cash balance, it is well positioned to invest in international expansion.

Global growth potential

International growth could help the Airtasker share price climb over time.

The business is already making progress overseas. In FY21, the UK marketplace saw GMW growth of 232% year on year and growth of 93% quarter on quarter.

In the US, it said that the Zaarly integration and US expansion planning was progressing well. It is aiming to start in the cities of Kansas City, Dallas and Miami.

It's hoping to reach an international annualised run rate of GMV of between $8 million to $10 million by June 2022.

Airtasker thinks that its total addressable market is many billions of dollars across Australia, the US and UK for existing local service industries. It wants to grow new services like flatpack furniture assembly and date night planning to complement existing services like cleaning, photography and office administration.

In FY22, it's targeting revenue of at least $35 million and GMV of at least $200 million.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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